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President Signs Children's Health Bill

Spending covered by 62-cent tax hike on cigarettes.

February 4, 2009, 07:00 pm

WASHINGTON -- President Barack Obama signed into law a bill late yesterday that extends health care coverage through the State Children's Health Insurance Program (SCHIP) to an additional 4 million lower-income children.

The bill was passed by the House of Representatives yesterday afternoon and passed the Senate last week. The measure calls for spending an additional $32.8 billion on SCHIP. To cover the increase in spending, lawmakers approved boosting the federal excise tax on a pack of cigarettes by 62 cents, to $1.01 a pack, according to an Associated Press report.

"Today, with one of the first bills that I sign, reauthorizing the Children's Health Insurance Program, we fulfill one of the highest responsibilities that we have: to ensure the health and well-being of our nation's children," said Obama at the signing of the bill, cited by a Washington Post report. "It's a responsibility that's only grown more urgent as our economic crisis deepens, as health care costs have exploded and millions of families are unable to afford health insurance."

NACS -- the Association for Convenience and Petroleum Retailing, opposed the bill.

"NACS isn't opposed to children's health care, we are opposed to increasing the federal excise tax," Chris Tampio, NACS' senior director of government relations, told CSNews Online. "It forces consumers to the unregulated and untaxed black and gray markets, such the Internet, or from sources selling cigarettes from Mexico or other unregulated countries. Kids are going online and buying them, even getting them from city cab drivers. But c-store operators ask for identification to control underage buying and, of course, collect the taxes."

The increased in the excise tax also poses a security concern, Tampio said. "People are no longer looking to rip off the cash at c-stores, because the industry has done such a good job at cash control," he said. "Now they are looking to steal cigarettes, because they are so expensive. Thousands of dollars worth of cigarettes are in the stores and this tax increase exacerbates that problem. In Chicago, with an Illinois state tax, Chicago's city tax and Cook County's tax, those cigarettes will be $8 to $9 a pack."

What's more, with cigarettes being the top-selling product inside the store, operators will be hit harder with credit card transaction fees. "People will be paying with credit cards even more, if two packs are more than $15, or $60 or $70 a carton," Tampio said. However, this fact was not strong enough to bring as an argument before Congress, he noted.

Opponents of the bill argued the tobacco tax increase hits poor consumers the hardest. Many also took exception to expanding the program and Medicaid to cover children of newly arrived legal immigrants.

Over the next four years, up to 13 million children could be covered under the program, which is run by the Health and Human Services Department and state governments. The legislation would allow states to offer a dental benefit through the program for children whose private health insurance does not cover dental care, according to the report.

More than 7 million children were enrolled in the program at some point in 2008. It was created more than a decade ago to help children in families with incomes too high to qualify for Medicaid but too low to afford private coverage. Federal money for the program was set to expire March 31, barring action by Congress, the AP reported.

Former President George W. Bush vetoed twice a similar spending increase.